Foreign exchange traders face a number of obstacles, from volatile markets to settlement risk. For this reason when trading currencies on the forex market it is important to have as much information as possible on the different forces behind fluctuations in exchange rates; access to current rates is not enough. A variety of players, from investors to governments, have a significant impact on the foreign currency exchange market.
Trading Currencies for Foreign Direct Investment
Foreign currency traders are not the only people who need to exchange money on the forex market. Businesses and even individuals may invest in a foreign country, either to own portfolio investments, a company, or property. These investors have to trade currency in the foreign exchange market in order to purchase assets in another country. They are not necessarily targeting currency trading to make money, although exchange rates would certainly be an issue when making large purchases and favorable differences can make an investment more desirable. If foreign direct investment in a country is expected to either increase of decrease then expect changes on the forex currency market.
International Trade and Forex Currency Trading
The traditional exchange of goods and services between different countries also impacts forex currency trading. In today's global market there are endless interactions between different entities that require a currency exchange. Either profits from exports, capital for imports, or compensation for employees in another country, when business is done across borders the foreign exchange market moves. International trade is in fact the reason that this market exists.
Foreign Exchange Traders and Governments
Foreign exchange traders also have to be aware of the financial movements of governments. A government may step in to affect the exchange rate of their own currency by buying or selling massive amounts of money, a practice known as intervention. Although not done on a daily basis, these transactions can have huge impacts on the market, causing traders to potentially gain or lose a large amount of money.
Speculators in the Foreign Currency Exchange Market
The speculators in the foreign currency exchange market are the players involved in the essence of currency trading. They are not buying or selling goods or services or investing in other countries; they are trading for the sake of trading, and profiting. Individual foreign exchange traders are speculators themselves, trading currencies or short-term investments in order to make money from predicted changes. As an individual, it is important to be aware of the larger speculators. Banks and investment firms often partake in currency trading, shifting relatively large amounts of money at a time.
Although it is impossible to know what every player in the foreign currency exchange market is planning at any point, having an awareness of their existence and their potential can help a forex trader make wiser, more profitable decisions.
SOURCE:http://currencies.suite101.com/article.cfm/players_in_the_foreign_currency_exchange_market
Trading Currencies for Foreign Direct Investment
Foreign currency traders are not the only people who need to exchange money on the forex market. Businesses and even individuals may invest in a foreign country, either to own portfolio investments, a company, or property. These investors have to trade currency in the foreign exchange market in order to purchase assets in another country. They are not necessarily targeting currency trading to make money, although exchange rates would certainly be an issue when making large purchases and favorable differences can make an investment more desirable. If foreign direct investment in a country is expected to either increase of decrease then expect changes on the forex currency market.
International Trade and Forex Currency Trading
The traditional exchange of goods and services between different countries also impacts forex currency trading. In today's global market there are endless interactions between different entities that require a currency exchange. Either profits from exports, capital for imports, or compensation for employees in another country, when business is done across borders the foreign exchange market moves. International trade is in fact the reason that this market exists.
Foreign Exchange Traders and Governments
Foreign exchange traders also have to be aware of the financial movements of governments. A government may step in to affect the exchange rate of their own currency by buying or selling massive amounts of money, a practice known as intervention. Although not done on a daily basis, these transactions can have huge impacts on the market, causing traders to potentially gain or lose a large amount of money.
Speculators in the Foreign Currency Exchange Market
The speculators in the foreign currency exchange market are the players involved in the essence of currency trading. They are not buying or selling goods or services or investing in other countries; they are trading for the sake of trading, and profiting. Individual foreign exchange traders are speculators themselves, trading currencies or short-term investments in order to make money from predicted changes. As an individual, it is important to be aware of the larger speculators. Banks and investment firms often partake in currency trading, shifting relatively large amounts of money at a time.
Although it is impossible to know what every player in the foreign currency exchange market is planning at any point, having an awareness of their existence and their potential can help a forex trader make wiser, more profitable decisions.
SOURCE:http://currencies.suite101.com/article.cfm/players_in_the_foreign_currency_exchange_market
No comments:
Post a Comment